VSAA deemed futile when new power plants operate

CEBU, Philippines - Even if the Visayas Supply Augmentation Auction (VSAA) is deemed as the answer to the looming power shortage in the Visayas, the implementation of this program will take time and might end up futile when the new power plants start operating next year.

Former Energy Regulatory Commission (ERC) commissioner Jess Alcordo said that if the Wholesale Electricity Spot Market (WESM) in Visayas was installed earlier “we don’t need those augmentation program at all.”

 Alcordo, who is also the president of Global Formosa Power Corporation (GFPC), said that since the ERC still has to approve the implementation of VSAA, this will take a longer time, considering the documentary processes.

“If we already have new [power] plants here VSAA will no longer be feasible,” Alcordo said in a press conference.

Alcordo disagreed the Department of Energy’s (DOE) reason that WESM is not yet applicable in Visayas, since there is no excess power, as over 90 percent is tied on bilateral contracts.

“Some government officials are hesitant to install WESM, believing that if WESM Visayas will operate the rates will increase, that is not true,” Alcordo said.

The introduction of VSAA, which works similarly as WESM, is pushed because “of lack of understanding” in the true benefits that is offered by the WESM, which created by Republic Act 9136, the Electric Power Industry Reform Act (EPIRA) of 2001.

If WESM were officially implemented here, the expected power supply deficit in September this year will be addressed effectively.

Besides, he said the centerpiece of EPIRA law, should also allow the “open access” benefits, which will give consumers the freedom to choose their electric suppliers, but the public is not enjoying the benefits f the EPIRA, because the National Power Corporation (Napocor) is not yet privatized.

Under the “open access” users of electricity with requirements of at least one megawatt, can connect directly to power generation company, without having to deal with the power distribution entity. He said this could already solve the problem of power shortage in Cebu, if property implemented.

Unless Napocor is disposed, the public will have to reap the benefits offered by the EPIRA, Alcordo said.

In the Visayas, the VSAA was introduced after the WESM failed to commercially operate on schedule a study result which said that it is not yet feasible to operate the spot market here, since there is no excess in electricity. “Why go to VSAA, when we have WESM here ready for operation?”

VSAA is a voluntary program which allows distribution utilities and large consumers of electricity to boost their supply deficit through a transparent and competitive means much like the electricity spot market in Luzon.

According to Alcordo, VSAA and WESM work the same in principle. Since VSAA will still go through a process with ERC, implementation is expected to take longer time.

He said the 246-MW power plant in Toledo will start to commercially operate by February next year, and this will already provide ample power supply here, thus nullifying the purpose of VSAA.